Using Recession as a Political Scare Tactic
By Mary Mostert (01/22/08)
Recently the war in Iraq seems to have dropped out of the news while the
status of the US Economy has suddenly become the main focus even in the
Presidential caucuses and primaries. Associated Press articles last week
characterized a 306 point drop in the stock market, as a "plunge" that
underscored "deepening concern about the country's economic health." What
happened last week was not a plunge. It was a small adjustment.
Since I was born in 1929, basically at a time when the Stock Exchange was at
its highest point, and grew up in the Great Depression, the ups and downs of
the economy have always fascinated me. Some years ago in researching the
subject I noticed that there had been 10 times during the previous 100 years
when the stock market suddenly lost 35% to 86% of value.
It is interesting to note that when the presidential race of 2000 was
beginning, the media was praising Bill Clinton for the great state of the
economy, when the market closed the first week of March at 9796.03. During
and since the 2000 presidential race, the media has seemed determine to drum
up a "Bush recession." In fact, I wrote a couple of articles on this in 2003
when the Democrats were predicting a disaster ahead as President Bush signed
his tax cut, job growth bill
( http://www.bannerofliberty.com/BOL-03MQC/5-30-2003.1.html ) in May and
again, in December of 2003, after the Democrats had announced that President
Bush would have the worst economic record
( http://www.bannerofliberty.com/BOL-03MQC/12-3-2003.1.html ) "since Herbert
Hoover."
For 8 years, as the media has proclaimed repeatedly that the economy was
failing under George W. Bush, the stock market has moved steadily upward,
reaching a record 14,000 several times in July and October 2007.
In 2000, Clinton's last year in office as the presidential campaigning was
taking place, the market was going down. In July of 1999 the stock market
had hit 11,313, but by March 7, 2000 it had dropped to 9796.03. That's a 13%
drop in the Clinton administration - which no one in the media ever
characterized as even a sharp drop, much less a "plunge."
When the World Trade Center and the Pentagon were attacked in September
2001, after Bush had been in office less than 9 months, the market dropped
to 8247.56 but gained nearly 6000 points by October 9, 2007 when it reached
14,164.53. During these up and down fluctuations, employment has remained at
record high numbers. A 306 point drop is an adjustment, not a plunge. In
fact, it was an adjustment of about 2.5%. A 25% drop in the market, which
would be a drop of more than 3000 for the current stock market, could be
called a "plunge." Last week's 2.5% drop was a small adjustment.
Few today seem to really know what happened in 1929. On September 3, 1929,
the Dow Jones Industrial Average reached a record high of 381.2. On
Thursday, October 24, 1929 the market had dropped 21% to 299.5. By 1932,
which was a presidential election year, the market had dropped almost 90%
and unemployment was over 30%. The Democrat candidate, Franklin Delano
Roosevelt, blamed the economic condition facing the nation entirely on his
Republican opponent, Herbert Hoover and America's system of free enterprise
capitalism. In his inaugural address of March 4, 1932,
( http://elsinore.cis.yale.edu/lawweb/avalon/presiden/inaug/froos1.htm ) which
is remembered for him saying "the only thing we have to fear is fear
itself," FDR outlined his plans to reverse the depression primarily by doing
away with free enterprise capitalism and introducing socialism. He announced
that the "restoration" of the economy "lies in the extent to which we apply
social values more noble than mere monetary profit." Those "social values"
were mostly socialism.
He announced his plan for the federal government to engage "on a national
scale in a redistribution endeavor to provide a better use of the land for
those best outfitted for the land," along with "national planning for and
supervision of all forms of transportation and of communications and other
utilities which have a definitely public character" and "a strict
supervision of all banking and credits and investments; there must be an end
to speculation with other people's money." New jobs, FDR announced, would
not come from the private sector but would "be accomplished in part by
direct recruiting by the Government itself, treating the task as we would
treat the emergency of a war, but at the same time, through this employment,
accomplishing greatly needed projects to stimulate and reorganize the use of
our natural resources." The government would become the major employer of
the nation, with government programs such as WPA, not private enterprise.
At a time when people were losing their homes and farms, Roosevelt chose to
shut down the banks and move the economy away from free enterprise
capitalism. He told the American people that they must "move as a trained
and loyal army willing to sacrifice for the good of a common discipline,
because without such discipline no progress is made, no leadership becomes
effective. We are, I know, ready and willing to submit our lives and
property to such discipline, because it makes possible a leadership which
aims at a larger good. This I propose to offer, pledging that the larger
purposes will bind upon us all as a sacred obligation with a unity of duty
hitherto evoked only in time of armed strife."
My mother and most of her generation obediently did as she was told, totally
believing every word the persuasive FDR said. During those Depression years
I remember huddling around the radio, which was plugged into the only
electric outlet in our house, as my mother listened intently to her hero,
FDR.
My mother did not live long enough to see the stock market ever rise to the
level it was when I was born. It took 25 years, the Second World War and the
election of Republican Dwight D. Eisenhower before the stock market finally
again rose to 382. Not only did most of my mother's generation, but also
most of my own generation, were convinced that it was Roosevelt's socialist
response to the Stock Market crash that saved the nation. Yet, what FDR did
was to make it impossible for entrepreneurs or home owners get credit to
open a business or buy a home.
In his book The Age of Turbulence, Allen Greenspan, former chairman of the
Federal Reserve Board, observes, from his many years as an economist who
watched the disintegration of the Soviet Union and other socialist
economies, that creating wealth requires both the right to own property and
risk taking - and freedom. Socialism is designed to reduce or eliminate the
right to own property, risk taking and freedom, which is probably why during
my formative years the stock market remained stagnant and home ownership was
very difficult to accomplish.
The Great Depression lasted for over two decades because Roosevelt and the
Democrats very effectively scared the voters into following their lead into
socialism. People who did have money, were afraid to spend it or put it into
a bank, where it could circulate. Instead, they hid what little money they
had and saved every penny. We even saved string and straightened nails,
rather than buying new string or nails. While that may traditionally be
considered admirable traits, it does not lead to inventiveness, risk taking,
new technology and consumer spending - all of which are necessary to improve
the standard of living of the poor, according to Greenspan.
It appears to me that we are again being frightened into a recession by the
media and the Democrats. However, I am hoping that the effort will be
thwarted by young voters. Today's young people don't usually read the
newspapers and when they do, they don't believe what they read, as their
grandparents did. Furthermore, few of them seem to have any difficulty in
finding a job. Unemployment nationwide is still only 5%, which, only a few
years ago, was considered dangerously low and a cause of inflation. In my
state, unemployment is only 2%. By 1932 unemployment was over 30% and
generally only the father was in the workforce.
This does not look to me like a recession. It looks like someone is trying
to manipulate the public into thinking there is a recession, for political
purposes. Hopefully, the younger generation will continue to ignore the
media, the economic doomsayers, and their grandparents warnings about the
"coming recession." If they do, I think the year 2008 will be a good year
for the economy, especially if the Bush tax cuts are made permanent and we
don't elect a socialist president and congress in the November election.
Mary Mostert
(Printer friendly version) Email: Mary Mostert
